What happened?

Over the past couple of years, multiple states have enacted pay transparency laws with the goal of increasing wage transparency for job seekers.  The objective of these laws is ultimately to achieve pay equality as job seekers approach the bargaining table with a general idea of what to expect in terms of salary.  Pay transparency laws basically require that job advertisements include a salary or wage range that is not open-ended and provides a reasonable, “good faith” expectation of the pay associated with the position.  Colorado’s pay transparency law took effect on January 1, 2021, and since then a number of states, and even some localities, have followed suit.

The list of pay transparency laws continues to grow as more and more states consider similar legislation.  The following chart from the Center for American Progress, available here, provides some details as to the various statutes that are in existence today.

While these laws may appear similar, aspects of the rules that impact their reach may differ, such as the size of the employers covered.  Notably, out-of-state businesses that employ remote employees may also be required to comply with these pay transparency laws even if the employer has no presence or employees in the state.  Employers must take note of the physical location of remote workers, the location from which the job can be performed, and where job advertisements are being placed to ensure compliance as the requirements are applicable to postings via third party websites, such as Indeed and LinkedIn, internal company job boards, internal transfers or promotions, and any other written media.

PERM Regulations

The vast majority of employers who sponsor employees for permanent residency do so through the PERM labor certification process.  PERM is a highly regulated process that requires a test of the job market to determine whether there are willing, qualified, and available United States (U.S.) workers to fill a particular position.  Employers are required to obtain a prevailing wage determination (PWD) from the Department of Labor (DOL) and place various ads and postings as part of the labor market test.

DOL regulations require that if a wage is listed in recruitment, it cannot be lower than the prevailing wage as determined by DOL and cannot be lower than the wage offered to the foreign national employee. DOL regulations only require that the wage be listed on the Notice of Filing, which is a required notice (not an advertisement) to be provided to the employer’s affected workforce.  Other forms of PERM recruitment do not require the listing of a salary.

Reconciling Pay Transparency Laws with PERM

While the state of Colorado has indicated that it will not enforce its pay transparency laws against employers placing ads pursuant to a PERM recruitment campaign, other states have not offered similar assurances.  Thus, employers must be cautious when conducting PERM recruitment that they do not violate state or local laws. Employers should consider including wage ranges in all PERM advertising, especially in light of the trend towards remote work and the potential reach of these ads to remote workers.  If an employer chooses, however, to consider including a wage or wage range on a case-by-case basis, it should consult with its labor and employment counsel and ask the following 5 questions:

1. Is the employer bound by any state or local wage laws, based on factors such as the size of the employer, the location of its headquarters, or its presence in a particular location?

2. Is the position affected by any state or local wage laws, based on factors such as the location of the job, whether remote work is permitted, or any travel requirements associated with the position?

3. Does the posted wage range satisfy the requirements under the PERM regulations (the low end of any wage range must be equal to or greater than the prevailing wage and the offered wage cannot be lower than the wage offered to the foreign national employee)?

As noted above, PERM regulations forbid an employer from including a wage or wage range that is lower than the prevailing wage or that offered to the foreign worker.

4. Is there any impact on timing?

PERM regulations permit that recruitment be conducted prior to the issuance of a PWD.  While the employer undertakes some degree of risk generally in choosing this option (e.g. lack of control over prevailing wage determination timing may result in expired advertising before filing is possible), there is also an increased risk in conducting recruitment before the issuance of a PWD if the advertisements must include a wage range that must not be lower than the prevailing wage.  For example, every year on July 1, posted prevailing wages are adjusted to reflect new wage data. It is not uncommon for some occupations to carry a prevailing wage requirement that has increased significantly from the prior year.  Therefore, if an employer includes a wage or wage range in its PERM advertising, it would be highly advisable to wait until after the PWD has been issued to place its advertisements. 

5. What is the impact of including a wage range?

Because it may often be necessary to adjust the low end of a wage range to a level that is typically higher than the employer would normally offer due to prevailing wage requirements, the PERM wage range may not be the true range that would be offered for a particular position. This situation may create inconsistencies with other advertisements placed pursuant to traditional, non-PERM advertising.  There may also be other considerations unique to the employer that should be considered in developing a PERM recruitment strategy that both complies with PERM and state/local regulations but also aligns with business strategy. Also, while it is not required to specifically list out all of the position’s requirements in a PERM advertisement, it may be beneficial to list the requirements in order to notify job seekers of the reason a PERM advertisement may command a higher wage range than an advertisement for a similar position.

Conclusion

New pay transparency legislation poses a challenging issue for employers attempting to navigate compliance with PERM regulations, which are outdated in addressing the current employment environment. This issue of the intersection of PERM requirements and applicable pay transparency laws must be addressed with immigration as well as labor and employment counsel to determine the best strategy for conducting PERM recruitment that satisfies both the PERM regulations as well as state and local rules.

A special thanks to Sara Jodka, a Member in Dickinson Wright’s Labor and Employment practice, for her review of this article and insight into pay transparency laws.

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